Health care and access to capital are limiting small business growth.
Small businesses are the backbone of the U.S. economy, and the heart of communities across the nation. They create jobs, deliver essential goods and services, and build strong and vibrant local economies while giving back to their communities.
These businesses in Oregon — many of which are members of Main Street Alliance of Oregon — employ less than 50 employees yet account for 96% of the state’s companies and are responsible for over 40 percent of the workforce.
Time after time, concerns of Oregon’s small businesses are often ignored while attention and resources have been centralized on large and multinational corporations.
In order for Main Street small businesses to thrive in the 21st century marketplace and global market, Oregon leaders should address fundamental conditions including capital access and public investments in health care.
Access to capital to start, operate and expand a business is a chronic barrier for main street business owners. For instance, when we ask MSA OR members to share their experiences when approaching banks for a loan, most respond that they have been turned downed with inadequate reasons or the loan of $50,000 to $100,000 is too small of a return on investment.
Others have stated outright that they were too discouraged to seek a bank loan. Women and minority entrepreneurs face even greater obstacles to secure the credit and capital needed to start or, if already operational, maintain and expand their businesses.
Since the financial crises, small-business bank loans have decreased by 20%, while loans to larger businesses have increased over the same period. According to a study by the Federal Reserve Bank of Atlanta, nearly half of small businesses owners, 44%, had issues in accessing credit.
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MSA OR applauds the Oregon Legislature, under the leadership of Senators Ginny Burdick and Lee Beyer, for recently establishing the Small Business Expansion Loan Fund, which provides loans for enterprises with 50 or fewer employees who are unable to access traditional commercial or private financing.
This small-business legislation is a step in the right direction. Now our elected leaders and state and city governments have an opportunity to further advance similar sensible and innovative public efforts that target small-business owners who employ less than 50 employees.
As capital access can stem growth, health care insurance can bankrupt small businesses and put owners and their employees and families in precarious situations. The success of many small companies is tied to ensuring that their employees, communities and the owners themselves can access quality and affordable health coverage. Business owners need stability and predictability, both of which the Affordable Care Act (ACA) has offered.
Prior to the implementation of ACA, health care premium costs and increases were often volatile. Many MSA OR members who were able to provide insurance for their employees witnessed double-digit percentage premium increases year after year.
The ACA has helped stabilize premium costs as insurers can no longer underwrite based on health status, and must adhere to minimum medical loss ratios. This shields small companies from sharp swings in premiums based on the health of one or two employees. The unprecedented slowdown in rate increases helps businesses’ bottom line and provide financial security, which allows the owners to plow those savings back into business investment and job creation.
It is clear, if Oregon’s small businesses are unable to provide health care benefits for their employees and themselves, they will be less competitive, which will hurt the state’s economy and local communities. While Congress and the White House have been trying to dismantle the ACA, Oregon has been advancing efforts to expand health care coverage. This work must continue until all Oregonians have affordable health care.
Oregon can grow and expand the entrepreneurial culture by creating the basic market conditions that allow Main Street small businesses to thrive and compete with larger competitors. Access to capital and affordable and quality health care policies fuel a strong middle class and create a level playing field for small businesses — this is the recipe for small business success.
MSA OR business owners urge our leaders and local governments to think local and small business first.
Khanh Le is director of the Main Street Alliance of Oregon, representing more than 4,000 small businesses.
A version of this article appears in the April 2018 issue of Oregon Business. To subscribe, click here.